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James Flanigan

Job Growth an Antidote to Mideast Violence

January 26, 2003|James Flanigan

Omar Salah, a Jordanian, says he has suffered "threats on my life, snakes in my garden, bullets on my doorstep." One thing, though, keeps driving him forward: money in his wallet.

Salah operates factories in Jordan and Israel -- one of a number of entrepreneurs who are supporting business development as the best antidote to violence in the Middle East.

On Monday, weapons inspectors will report on Iraq to the United Nations, and on Tuesday President Bush will speak about Iraq and tensions in the Middle East in his State of the Union address.

But what Salah and others increasingly recognize is that long-term stability from Israel to Iran to Iraq rests, most of all, in creating a robust economy.

"The great need in that region is for good jobs so that people may use their skills," says Rep. Howard Berman, who foresees a program of revolving credit and small grants to local businesses to spark Middle East development. "The U.S. must play a leadership role in this," the Van Nuys Democrat adds. Unless the region develops economically, "it will continue to be a breeding ground for terror."

It is hardly a partisan notion. The Republican White House has put into the budget pipeline so-called Enterprise Funds for the Middle East. The program is patterned after the $1.3 billion in capital made available to small businesses that helped lift the economies of Poland and other Eastern Bloc countries after the fall of communism in the late 1980s. Enterprise Funds for Iraq, assuming Saddam Hussein's departure, eventually will be included.

Salah knows firsthand the power of economic growth. Already successful as a manufacturer of apparel for Limited Brands Inc.'s Victoria's Secret and electronic parts for Motorola Inc. in Irbid, Jordan, Salah's Century Investment Corp. three years ago bought a bankrupt sweater-making plant in Beersheba, Israel. He is operating the business profitably in a Qualified Investment Zone, a classification that gives its production easy access to the U.S. market.

"I am a manufacturer," he says proudly. "We create jobs" -- some 35,000 throughout his empire.

Other entrepreneurs are blazing similar trails. Over the last 50 years, Stef Wertheimer has built industrial parks in Israel, including a giant complex in Galilee, that account for $2 billion worth of production annually.

Now Wertheimer is building an industrial park in Gebze, Turkey, in partnership with a business family named Sabanci, and at Aqaba, Jordan, with a tycoon who withholds his name because it is still dangerous for Arabs to be seen doing business with Israelis.

But his dreams are even larger. Wertheimer is asking the United States to back a Marshall Plan-style program for the industrialization of Turkey, Jordan, the Palestinian areas, Syria and Lebanon -- all in partnership with Israel.

In the Galilee, which is half Arab and half Jewish, "we have proven that it can be done -- to live together and work together," Wertheimer told the House International Relations Committee last year. Impressed, U.S. officials told him to think also of the planned economic rehabilitation of Iraq after the current regime exits.

The region is, without a doubt, in need of an economic boost.

A study by 30 Arab experts under the auspices of the U.N. Development Program recently issued a frank and self-critical report on 22 countries of the Arab Middle East. These nations contain 280 million people, 5% of the world's total, and yet account for less than 2% of the world's economic output. (If non-Arab Iran is included, the region accounts for 8% of the globe's population and 2% of its economic output.)

The Arab scholars cited worrisome evidence of decline. Labor productivity has slipped for 40 years. Some 65 million of the region's people are illiterate, including one of every two women.

In 1960, the economies of the Middle East were greater than those of the "Asian Tigers" -- the collective name given to South Korea, Thailand, Taiwan, Hong Kong, Singapore, Indonesia and Malaysia. Today, the Middle East produces less than does South Korea alone.

The Arab experts didn't call for handouts from the developed world. Rather, they pointed to the need for "building human capabilities through revitalizing the economies and providing equal opportunity to all, especially women."

Fittingly enough, Iraq once stood out as a Middle Eastern society that educated its people, gave opportunity to women and prospered greatly before the dictatorial regime of Saddam Hussein turned into a nightmare. The people of Iraq -- not its oil -- are the true riches that will spur the revival of that country once the Hussein regime is dispatched.

The fact is, there is arguably no region as important at this moment in history as the Middle East, which has a higher proportion of young people, faster population growth and, of course, more unrest.

Within 20 years, the U.N. report notes, the populations of the Arab countries will be 400 million to 450 million. Either the generations now being born will develop as prospering and contributing citizens of the world or they will scuttle forth as bitter, disappointed denizens prone to make war.

With this as a backdrop, the region's entrepreneurs are passionately trying to make money. But in doing so, they also are trying to make something far more valuable, as Salah stresses.

"Economic ties between Israelis, Palestinians, Jordanians and other parties," he says, is the key "to keep peace in our region."

James Flanigan can be reached at jim.flanigan@ latimes.com.

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